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What are Scope 2 emissions?

Carbon accounting software enables companies to streamline and automate their carbon accounting, with comprehensive sustainability software allowing companies to carry out their entire decarbonization journey on a single platform. 

Planted supports companies with a holistic sustainability platform for carbon accounting, decarbonization and audit-proof ESG reporting. The calculation of the carbon footprint to record the scopes takes place intuitively within the software, is based on the GHG Protocol and is certified by TÜV Rheinland. With personal consultants, Planted also helps companies to reduce their internal emissions with the involvement of their employees.

Book your free, no-obligation consultation now and start your journey towards Net Zero.

What are scopes?

In the world of sustainability and environmental management, "scopes" refer to the categories of greenhouse gas emissions caused by an organization. This categorization helps companies to calculate their carbon footprint and define measures to reduce their emissions.

The origin of the Scopes dates back to 2001, when the Greenhouse Gas Protocol (GHG) created an international standard for emissions reporting. Prior to the introduction of the GHG Protocol, there was no generally accepted method by which companies could quantify their contribution to climate change. The clear division into Scopes 1, Scope 2 and Scope 3 enables companies to present a structured and comparable method for calculating and reporting their carbon footprint. In addition, the GHG Protocol and the scopes are the first uniform standard that is recognized by both companies and environmental organizations. 

What are Scope 2 emissions?

Scope 2 emissions include indirect greenhouse gas emissions that occur when a company purchases energy in the form of electricity, steam, heat or cooling that was generated outside its own organization. These indirect emissions are crucial for companies that want to calculate and understand their carbon footprint.

How do Scope 2 emissions differ from Scope 1 and 3 emissions?

In contrast to Scope 2, the Scope 1 emissions direct emissions from sources owned or controlled by the company. This includes emissions from operational facilities and vehicles. When a company wants to calculate its carbon footprint, it typically starts with these directly attributable emissions. The carbon footprint calculation for Scope 1 refers to gases that are produced directly by the combustion of fuels in the company's facilities or by company-owned vehicles - for example, emissions from the use of a company fleet or the operation of machinery and air conditioning systems in companies.

Scope 3 emissions represent all indirect emissions that occur along the company's entire value chain but are not directly owned or controlled by the company. This category is often the most comprehensive and diverse, as it includes both upstream emissions from the production of the products or services purchased and downstream emissions resulting from the use and disposal of the products sold by consumers. Scope 3 emissions are often considered the most complex part of the carbon footprint, as they require a detailed analysis of the entire supply chain.

How does Scope 2 vary by business unit?

Electricity is the main source of Scope 2 emissions for many companies. These emissions are basically divided into two categories: On the one hand, there is electricity used directly by the end consumer, which falls under Scope 2. On the other hand, there are so-called "T&D losses" (transmission and distribution losses), which are caused by energy transmission and distribution by the supply companies and are classified under Scope 3. A company's Scope 2 emissions are determined by the sources of the electricity it purchases. If a company relies heavily on electricity from fossil fuels, the Scope 2 emissions are generally higher than for an energy mix based on renewable energies, biomass or natural gas.

The Greenhouse Gas Protocol provides detailed guidance on how to deal with Scope 2 and points out that in some cases - such as leased premises - the allocation of emissions from purchased energy is not always clear. Here it is important for companies to understand the nature of the tenancy and adopt an approach to carbon accounting that is consistent with the GHG Protocol guidelines for the leased space. As part of the lease, the proportionate electricity, steam, heating and cooling capacity used by the renting company is integrated into the balance sheet.

Why are Scope 2 emissions important?

In a world where sustainability is increasingly influencing business decisions, companies that record, analyze and reduce their emissions data ensure their long-term success. On the one hand, companies comply with reporting obligations such as the Corporate Sustainability Reporting Directive (CSRD), optimize operational processes, increase competitiveness and minimize costs and risks through carbon accounting and the associated recording of the scope. In addition, companies that act sustainably meet the demands of internal and external stakeholders and score points as an attractive employer or in employer branding.

How are Scope 2 emissions measured?

The company's energy consumption and specific emission factors are used to measure Scope 2 emissions. These factors indicate how much CO₂ is emitted during the production of a unit of energy.

The Greenhouse Gas Protocol, which provides guidelines for recording Scope 1, 2 and 3 emissions, is often used to calculate a company's carbon footprint. ISO 14064 provides standards for quantifying and reporting these emissions. In some regions, the preparation of such a balance sheet is mandatory in order to manage the company's sustainability and CO₂ emissions. Tools such as CO₂ footprint calculators help companies to accurately calculate their Scope 2 emissions.

The best measures to reduce Scope 2 emissions?

Companies can take the following measures to reduce Scope 2 emissions:

  • Energy transition: Switch to renewable energy sources such as wind, solar or hydroelectric power to minimize the consumption of fossil fuels.
  • Energy efficiency: Investment in energy-efficient technologies and equipment, including efficient air conditioning systems for companies, lighting and heating systems, to reduce overall energy consumption.
  • Green electricity contracts: Conclusion of green electricity contracts or Power Purchase Agreements (PPAs), which ensure that the electricity purchased comes from sustainable sources.

Software for measuring Scope 2 emissions

There are specialized software solutions for recording, analyzing and managing scopes that help to automate CO₂ accounting and implement the entire decarbonization strategy on a single platform. These tools also facilitate compliance with reporting standards such as CSRD or ISO 14064.

With Planted, we offer your company a holistic software solution that allows you to take action from TÜV-certified CO₂ accounting to dual materiality analysis and CSRD-compliant reporting. In addition, we enable individualized reduction and local environmental protection through tree planting and forest protection in Germany. Book your free demo today.

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How-to: CO₂ balance sheet of companies